FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1994
Commission file number 0-14237
First United Corporation
(Exact name of registrant as specified in its charter)
Maryland
52-1380770
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification no.)
19 South Second Street, Oakland, Maryland 21550
(address of principal executive offices) (zip code)
(301) 334-9471
Registrant's telephone number, including area code
Not applicable
Former name, address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filedall reports required
to be filed by Section 13 or 15(d) of the Securities
X Yes No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common stock, $.01 Par value--6,191,767 shares outstanding as of June 30, 1994
Preferred stock, No par value--No shares outstanding shares outstanding as of
June 30, 1994.
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INDEX
FIRST UNITED CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1994 (Unaudited),
December 31, 1993 and June 30, 1993 (Unaudited).
Consolidated Statements of Income (Unaudited) - Three months
ended June 30, 1994, and June 30, 1993.
Consolidated Statements of Income (Unaudited) - Six months
ended June 30, 1994 and June 30, 1993.
Consolidated Statement of Cash Flows (Unaudited) - Six months
ended June 30, 1994 and June 30, 1993.
Notes to Unaudited Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-k.
SIGNATURES
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FIRST UNITED CORPORATION
Consolidated Balance Sheet
June 30, Dec. 31, June 30,
ASSETS 1994 1993 1993
(Unaudited) (*) (Unaudited)
Cash and Due From Banks $14,108 $12,832 $10,369
Investments:
Available for Sale:
U.S. Treasury Securites 21,850 0 0
Obl. of Other U S Gov. Agen. 29,914 0 0
Other Investments 19,412 0 0
--------------------------
Total Available 71,176 0 0
Held until Maturity:
U.S. Treasury Securities 0 23,467 25,243
Obl. of Other U S Govt Agen 2,800 33,315 38,123
Obl. of St. and Loc. Govt 8,409 8,538 7,959
Other Investments 10,999 16,211 16,425
---------------------------
Total Held to Maturity 22,208 81,531 87,750
---------------------------
Total Investment securities 93,384 81,531 87,750
Federal Funds Sold 1,980 1,903 5,177
Loans 317,368 316,782 303,244
Reserve for Poss. Credit Loss (2,341) (2,306) (2,771)
----------------------------
Net Loans 315,027 314,476 300,473
Bank Premises and Equipment 8,366 8,026 7,725
Acc. Int. Rec. and Other Assets 5,555 4,612 5,428
----------------------------
TOTAL ASSETS $438,420 $423,380 $416,922
============================
* The balance sheet at December 31, 1993 has been derived from the audited
financial statements at that date.
See notes to unaudited consolidated financial statements.
() Indicates Deduction
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FIRST UNITED CORPORATION
Consolidated Balance Sheet
June 30, Dec. 31, June 30,
1994 1993 1993
(Unaudited) (*) (Unaudited)
LIABILITIES
Deposits
Non-int. Bearing Deposits $ 42,272 $ 41,456 $ 35,106
Interest Bearing Deposits 340,424 327,071 330,096
---------------------------
Total Deposits: 382,696 368,527 365,202
Res. for Taxes, Int., &
Other Liabilities 5,343 5,821 4,787
Dividends Payable 0 660 0
----------------------------
TOTAL LIABILITIES $388,039 $375,008 $369,989
SHAREHOLDER'S EQUITY
Preferred Stock -No Par Value
Authorized and Unissued; 2,000 Shares
Capital Stock -Par Value $.01 per Share:
Authorized 12,000 shares; Issued and
Outstanding 6,192 shares at June 30,
1994, 6,186 outstanding at December
31, 1993, and 6,167 outstanding at
June 30, 1993 $ 62 $ 62 $ 62
Surplus 23,141 23,005 22,832
Retained Earnings 27,842 25,305 24,039
Unrealized Gains and Losses (664) 0 0
----------------------------
TOTAL SHAREHOLDER'S EQUITY $50,381 $48,372 $46,933
----------------------------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $438,420 $423,380 $416,922
============================
*The balance sheet at December 31, 1993 has been derived from the audited
financial statements at that date.
See Notes to unaudited consolidated financial statements.
() Indicates Deduction
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FIRST UNITED CORPORATION
Consolidateed Statement Of Income
(In Thousands, except per share data)
Three Months
Consolidated (All Subsidiaries) Ended June 30,
1994 1993
(Unaudited)
INTEREST INCOME
Interest and fees on loans $6,981 $6,757
Interest on investment securities:
Taxable 905 1,064
Exempt from federal income tax 129 136
--------------------
$1,034 $1,200
Interest on federal funds sold 73 108
--------------------
TOTAL INTEREST INCOME $8,088 $8,065
INTEREST EXPENSE
Interest on deposits:
Savings $464 $520
Interest-bearing transaction acct. 532 542
Time, $100,000 or more 119 152
Other time 1,544 1,816
--------------------
TOTAL INTEREST EXPENSE $2,659 $3,030
NET INTEREST INCOME $5,429 $5,035
Provision for possible credit losses (83) (165)
---------------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES $5,346 $4,870
OTHER OPERATING INCOME
Trust department income $224 $196
Service charges on deposit accts. 445 386
Security gains 0 0
Other income 319 380
--------------------
$988 $962
OTHER OPERATING EXPENSES
Salaries and Employees Benefits $2,183 $1,923
Occupancy Expense of Premises 237 230
Equipment Expense 273 265
Data Processing Expense 126 100
Deposit Assess. and Related Fees 241 233
Other Expense 897 881
---------------------
$3,957 $3,632
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INCOME BEFORE TAX $2,377 $2,200
(Less Income Tax) (815) (708)
----------------------
NET INCOME $1,562 $1,492
======================
NET INCOME PER SHARE $0.25 $0.24
======================
Av. Common Shares Outstanding 6,189 6,180
======================
See Notes A and C to Unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
Consolidated Statement Of Income
(In Thousands, except per share data)
Six Months
Consolidated (All Subsidiaries) Ended June 30,
1994 1993
(Unaudited)
INTEREST INCOME
Interest and fees on loans $13,859 $13,649
Interest on investment securities:
Taxable 1,694 2,154
Exempt from federal income tax 281 318
--------------------
$1,975 $2,472
Interest on federal funds sold 95 205
--------------------
TOTAL INTEREST INCOME $15,929 $16,326
INTEREST EXPENSE
Interest on deposits:
Savings $911 $1,039
Int.-bearing transaction acct. 960 1,149
Time, $100,000 or more 221 233
Other time 3,050 3,577
--------------------
TOTAL INTEREST EXPENSE $5,142 $5,998
NET INTEREST INCOME $10,787 $10,328
Provision for possible credit losses (163) (338)
---------------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES $10,624 $9,990
OTHER OPERATING INCOME
Trust department income $434 $360
Service charges on deposit accts. 814 735
Security gains 3 28
Other income 628 469
---------------------
$1,879 $1,592
OTHER OPERATING EXPENSES
Salaries and Employees Benefits $4,253 $3,737
Occupancy Expense of Premises 505 472
Equipment Expense 536 481
Data Processing Expense 230 193
Deposit Assess. and Related Fees 488 457
Other Expense 1,812 1,837
---------------------
$7,824 $7,177
INCOME BEFORE TAX $4,679 $4,405
(Less Income Tax) (1,517) (1,465)
---------------------
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NET INCOME $3,162 $2,940
=====================
NET INCOME PER SHARE $0.51 $0.48
=====================
Av. Common Shares Outstanding 6,189 6,180
=====================
See Notes A and C to Unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS) Six Months
Ended June 30,
OPERATING ACTIVITIES 1994 1993
(Unaudited)
Net Income $ 3,162 $ 2,935
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for posible credit losses 163 338
provision for depreciation 435 588
Net accretion & amortizatin of investment
security discounts & premiuns 416 450
Increase in accrued interest & other
receivables (943) (401)
Decrease(increase)in accrued interest
& other payables 1,138 (1,577)
--------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,371 $ 2,333
INVESTING ACTIVITIES
Proceeds from maturities of available for sale
securities $ 23,581 $ 43,085
Purchases of available for sale securities (35,829) (47,684)
Proceeds form maturities of held to maturity
securities 830 0
Purchases of held to maturity securities (4,556) 0
Net (increase)decrease in short-term loans (818) 1,812
Net decrease(increase) in longer-term loans 1,533 (4,313)
Purchases of premises & equipment (775) (1,499)
-------------------
NET CASH USED IN INVESTING ACTIVITIES $(16,034) $ (8,599)
====================
FINANCING ACTIVITIES
Unrealized gains(losses) in available for sale
securities, net of tax $ (664) $ 0
Net increase in demand deposits, NOW
accounts and savings accounts 9,654 3,488
Net increase (decrease) in certificates of
deposit 4,515 (4,102)
Cash dividends declared (619) (1,091)
Proceeds form issuance of capital stock 130 196
NET CASH PROVIDED BY -------------------
FINANCING ACTIVITIES $ 13,016 $ (1,509)
-------------------
Decrease in cash and cash equivalents $ 1,353 $ (7,775)
Cash & cash equivalents at beginning of year $ 14,735 $ 23,321
-------------------
Cash & cash equivalents at end of quarter $ 16,088 $ 15,546
===================
See note A to unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
Note to Unaudited Consolidated Financial Statements
June 30, 1994
Note A -- Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do note include all
the information and footnotes required for complete financial
statements. In the opinion of management, all adjustements
considered necessary for a fair presentation, consisting of normal
recurring items have been included. Operating results for the six
month period ended June 30, 1994, are not necessarily indicative of
the results that may be expected for the year ending December 31,
1994. The enclosed consolidated financial statements should be
read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1993.
Per share financial information has been restated for the
100% stock divdend effective in the form of a 2:1 stock split paid
June 15, 1993, and for the 50% stock dividend effective in the form
of a 3:2 stock split paid February 8, 1994.
Note B -- Accounting Change
In May 1993 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The
Company adopted the provisions of the new standard for investments
held as of or acquired after January 1, 1994. In accordance with
the Statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The
cumulative effect as of June 30, 1994, of adopting Statement 115
decreased shareholder's equity by $664,000 (net of $342,000 in
deferred income taxes) to reflect the net unrealized holding losses
on securities classified as available-for-sale. Previously, these
securities were carried at amortized cost or
lower-of-cost-or-market.
Note C --
The consolidated financial statements of the Corporation
give retroactive effect to the merger with Myersville Bank, which
has been accounted for as a pooling of interests.
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Part I. Financial Information
Item II. Management's Discussion and Analysis
Consolidated net earnings for First United Corporation during
the second quarter of 1994 amounted to $1.56 million, or $.25 per
share. This compares favorably to $1.49 million, or $.24 per
share for the same quarter of 1993. Year-to-date earnings were
$3.16 million, or $.51 per share which represents an increase of
7.55 percent over the same period in 1993. Year-to-date, Return on
Average Assets (ROAA) was 1.47 percent. The Return on Average
Equity (ROAE) was 12.79 percent for the year. In comparison, the
ROAA and ROAE for the year of 1993 was 1.42 percent and 12.86
percent, respectively.
Net interest income was $10.79 million for the first six
months of 1994. This represents a 4.44 percent increase over the
first six months of 1993. Loan growth and effective
asset/liability management made this growth possible. Loans were
the main source of interest income accounting for 87.00 percent of
the total interest income. Other Time Deposits were the main
source of interest expense, totalling $3.05 million of the $5.14
million.
Other operating income increased to $1.88 million which
represents a $.29 million increase or 18.03 percent over the same
period a year ago. Strong sales in the Trust Department,
commissions earned through PRIMEVEST Financial Services and
Oakfirst Life Insurance Company have caused the increase.
The provision for possible credit losses was $.16 million for
the first half of 1994 versus $.33 million for the first half of
1993. Net charge-offs year-to-date were $.13 million versus $.37
million for the same period in 1993. As these numbers reflect, the
Corporation continues to emphasize stringent underwriting standards
and has a strong commitment to the loan review process.
Non-interest expense increased from $7.18 million for the
first six months of 1993 to $7.82 million for the same period in
1994, representing a 9.01 percent increase. Salaries and employee
benefits were the main reasons for this increase. The Corporation,
through solid teamwork of all its staff members, remains vigilant
in its effort to increase efficiency.
Deposit growth continues to remain steady for the Corporation
during the first half of 1994. Total deposits were $382.70
million, representing a 3.84 percent increase over year end 1993.
Net loans increased $.55 million to $315.03 million.
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Shareholders' equity increased to $50.38 million or a 4.15
percent increase over year end. The Corporation posts a healthy
capital position, reflective of a risk-based capital ratio of 18.97
percent.
The Corporation paid a cash dividend on May 1, 1994 of $.10
per share to shareholders of record as of April 21, 1994. This
dividend closely equals the $.16 per share dividend paid for the
same period of 1993, which, when adjusted for the 3 for 2 stock
split, is the equivalent of $.1067 per share. In addition, a cash
dividend of $.12 per share was declared on July 6, 1994. The
dividend is payable August 1, 1994, to shareholders of record as of
July 21, 1994.
In an ongoing commitment to deliver our products and services
in a quality manner, First United will open its new White Oaks
Office in Cumberland during the third quarter. This new facility
will offer an automated teller machine (ATM), additional office
space, and a FUN Bank designed for children.
Construction continues on the Riverside Center Community
Office to be located in North Frederick. It is anticipated that
this office will open at the end of the third quarter. This
Myersville Bank Office will offer a complete product line, plus
house offices for two Trust Officers and a PRIMEVEST Investment
Executive.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Other Information.
None.
Item 5. Exhibits and Reports on Form 8-K.
The Company did not file any reports on Form 8-K
for the period ending June 30, 1994.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST UNITED CORPORATION
Date 8/09/94 /s/ RICHARD G. STANTON
---------- ----------------------------------------
Richard G. Stanton, Chairman of the Board,
President, and Chief Executive Officer
Date 8/09/94 /s/ ROBERT W. KURTZ
---------- -----------------------------------------
Robert W. Kurtz, Executive Vice President
and Treasurer
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SIGNATURES
Pursuant to the requirements of the Securities Exhange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST UNITED CORPORATION
Date 8/09/94
--------- ------------------------------------------
Richard G. Stanton, Chairman of the Board,
President and Chief Executive Officer
Date 8/09/94
---------- ------------------------------------------
Robert W. Kurtz, Executive Vice President
and Treasurer
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